Harry Dent Jr. Says Deflation, Not Inflation

For investors banking on inflation as the long-term trend in the USA, consider cyclical economist Harry Dent’s analysis and thoughts. Harry Dent suggests that credit is being destroyed at such a rapid rate that the money printing engaged in by the Federal Reserve will not result in inflation for the US Dollar, but rather, a severe deflation that will effect all asset classes, including real estate and gold!

For inflationists, this may not be what you want to hear, but it is well worth considering what Harry Dent has to say. In the early 90’s, Dent predicted the boom that eventually led to the bust of the tech bubble and the boom in real estate. In 2005, his book “the Next Bubble Boom” discussed the coming collapse of financial markets, real estate and commodities – yes, commodities, which Dent suggests will come crashing down in late 2009 to mid-2010.

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Hmm, On HS Dent’s website, on one of his pages: “Class 4: The Spending Wave Page 2” he says:
We are forecasting that the U.S. economy (and the global economy) will continue to boom until around 2010 before experiencing an extended slowdown into 2023. Stock prices are likely to peak by late 2009 or 2010 and then bottom around late 2022 or so. The Dow could reach 25,000 and the Nasdaq could reach its old high of 5,000 before the end of the decade when this boom ends. >>

I’m wondering if he wrote this page a long time ago way before the Oct 2008Â crash? If so, then he must of missed the crash completely? I’m not sure what his track record on this, but obviously we are not going to go to dow 25k or nasdaq 5k. In fact, his recent forecast says there will be a slow down at the end of July at the latest. So he’s inconsistent in his forecasts from what I am seeing. Let me know if you see any other observations.

Tony, in the book “The Next Bubble Boom” i remember a similar forecast. the book was written in 2005 (2004?) and i remember wondering how accurate the specific year might be.

The cycles Dent is speaking of are multi-faceted and in his monthly forecasts he gives a number of different ‘possibilities’. Basically, If/then statements combined with graphics/cyclical analysis. Also, during say, 2009Â -2022, we would probably see lots of ups and downs — but there is usually a general trend he suggests.

I would be curious to know the date of the article you read. He may be off on the dates, and this is why these short-term ‘plays’ in the market can be dangerous, but i think overall, his trending is pretty solid.

Dent is a deflationist, so for him to say DOW 25K or NASDAQ 5K, he must be looking at a hyperinflation-type scenario (which he has not completely ruled out). If you have it, could you paste the link here so I (and any others who are interested) could take a look at that. I am curious about this as well.

I do like Dent, and Faber and many others, but over the last couple years, I have found that no one can predict the market exactly, especially when referring to timing a boom or a collpase in short-term time intervals. this is why, when you read my posts or comments, you may find that I am often conflicted and do not give a ‘solid’ forecast in one specific direction. No matter how much we think we know, the global marketplace does whatever it wants — and takes no prisoners!

I do think this was written a very long time ago. I have read hisÂ free article released March 1stÂ and he had refined his numbers in short-term outlooks and it seems pretty solid what he said would happen fromÂ March to June today about the dow going below 7k and buying on the dip if you’re not in yet or wait until there’s a rebound to sell which has happened and is happening. I do have to read all his books and prior newsletters to see how accurate he was before. This is something I like doing to see how reliable and credible an expertÂ is. I go back and see what their prior predictions were, ALL OF THEM, not just the onesÂ mentioned since people tend to forget all their mistakes and remember and mention only their correct predictions.

This is what I’ve found from International Speculator from Casey’s team. They have tons of picks and they only mention the good ones to boost their track record. When I did my own analysis of each and every single one of their picks (took me forever) I found that it wasn’t as great and the real number was about 100% returnsÂ in 3-5 years, not their 500% lol.

I’m curious as to know if HS Dent would send out all his prior newsletters if I subscribe? I would like to see what he forecasted for about 5 – 10 years. That would give me a good idea how accurate and reliable he is. Or you can let me know how your returns have been from following him.

I learned about this gentleman a few minutes ago and have had a chance to review some of his comments.. Â For practical guidance, I prefer Marc Faber’s commentary. Â Â For thematics, please look to regions that have created wealth, population growth. Â As far as inflation, look into history, when the US debt levels were high, subsquent inflation was in the double digits! Â Likely to repeat itself, not just from a monitization issue but also from a demand basis. Energy for instance has a projected 50 % increase from 2003 to 2030.. more in developing nations with 80% increased demand. Â Fuels used for electricity production are for the most part Coal and Nat. Gas.. Â Hope this helps.

Thomas, I agree that we will see a long-term inflationary impact. And, as such, a long-term investor should probably be focused on this scenario, but the time frame could be 10 years from now.

In the short-term, one would have to consider not just the debt, but it seems, that the leverage as well. There is so much leverage in the system that in the short-term, we should see a deflationary impact. I am not sure they can print enough money to ‘pay off’ the leverage in the global financial system. I believe this is the argument that Harry Dent is making.

Though, as mentioned, Dent has been forecasting very high DJIA targets for later on.

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